U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15461 / August 27, 1997
SECURITIES AND EXCHANGE COMMISSION v. FRANK A. M. LUCA, RUDY CROSSWELL, and
PAULA G. DEN BOER, Civil Action No. CV-97-1813-PHX-EHC (D. Az.)
The Securities and Exchange Commission ("Commission") announced that
on August 27, 1997 it sued Frank A. M. Luca, age 53, of Scottsdale,
Arizona, for fraud, and sued Luca and two of his sales agents, Rudy
Crosswell, age 49, of Scottsdale, Arizona, and Paula G. Den Boer, age 47,
of Paradise Valley, Arizona, for offering and selling unregistered
securities and for failing to register with the Commission as securities
broker-dealers. Luca, Crosswell and Den Boer offered and sold limited
partnership units and promissory notes from 1990 to 1995. From at least
January of 1990, Luca raised over $10 million from over 400 mostly elderly
and unsophisticated investors nationwide. Many of the investors attended
the same church as Luca in Scottsdale, Arizona.
Luca told investors that they were investing in residential and
commercial real estate developments in Henderson, Nevada, a community near
Las Vegas. Although some investor funds were used to purchase and develop
land, most were used: (1) to pay principal and "returns" to earlier
investors, (2) to build and furnish Luca's lavish 10,000 square foot home
in Scottsdale, Arizona, and (3) to pay personal expenses, commissions and
business expenses. Luca also made large gifts and loans to charities. The
Commission alleges that Luca misappropriated over $3.2 million from
investors. Although Luca had no business activities that generated any
profit to him or his investors, he continually paid investors "returns" of
20 to 25 percent. Luca used new investor funds to pay existing investors
their returns.
Crosswell and Den Boer were two of Luca's top independent sales
agents, receiving hundreds of thousands of dollars in commissions. The
Complaint seeks a permanent injunction, disgorgement and an accounting
against Luca for violating Sections 5(a), 5(c) and 17(a) of the Securities
Act of 1933, and Sections 10(b), and 15(a)(1) of the Securities Exchange
Act of 1934, and Rule 10b-5 thereunder. The Commission seeks a permanent
injunction and civil penalties against Crosswell and Den Boer for violating
Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 15(a)(1)
of the Securities Exchange Act of 1934.
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